Healthcare Sector Comment – November 2016

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On 9th November 2016, Donald Trump became the 45th US President-Elect, so what does this mean for the healthcare M&A market?

First, during campaigning Trump promised to cut down on tax inversion M&A, which avoids US corporate taxes on foreign income. Instead, Trump has now suggested a tax holiday whereby corporate tax rates are cut from 35% to 10% for a short period of time. This will encourage large US companies to bring cash back into the US, potentially providing a war chest to drive further acquisitions and investment in R&D, as Agilent has announced it plans to do so in the last few days.

Second, that he would cut ‘red tape’ at the FDA to get drugs approved more quickly, which prompted a rally in pharma & biotech stocks following the result but it still remains to be seen what material impact he can have.

Third, Trump’s macroeconomic plans revolve around deregulation, lower taxes and an expectation of continued low interest rates. These factors, combined with Trump’s penchant for dealmaking, should lead to a favourable M&A environment both in the US and further afield.

In this month alone we have seen the following deals involving the US:

Apax Partner’s acquisition of a 50.1% stake in Vyair Medical, the respiratory solutions business of Beckton, Dickinson & Co., for €228m;

Duran Group GmbH, the Germany-based manufacturer of glass products acquired Kimble Chase Life Science and Research Products LLC, the US-based manufacturer of reusable, disposable, and specialty laboratory and scientific glassware, for €117m.

Novogen Limited, the listed Australia-based pharmaceutical research and development company acquired Glioblast Pty Limited, the Australia-based developer of molecular inhibitor for treatment of brain cancer.